What is EMI?
EMI stands for Equated Monthly Instalment. It is the amount you pay each month toward a loan. An EMI normally contains both principal and interest.
How is EMI calculated?
- The loan amount is the principal.
- The interest rate affects the cost of borrowing.
- The loan tenure decides how long you make payments.
- The EMI formula uses all three to produce a monthly payment.
Try different loan amounts, rates, and tenures in the calculator. A longer tenure can reduce the monthly payment but may increase the total interest paid.
What is the EMI formula?
The standard EMI formula uses the loan amount, monthly interest rate, and number of monthly payments.
EMI = P × r × (1 + r)n ÷ ((1 + r)n − 1)
Here, P is the loan principal, r is the monthly interest rate expressed as a decimal, and n is the total number of monthly payments.
If the annual interest rate is given, divide it by 12 to get the monthly rate. For example, an annual rate of 8.5% gives a monthly rate of about 0.7083%, or 0.007083 as a decimal.
How to calculate EMI manually
To calculate EMI manually, first convert the annual interest rate into a monthly decimal rate. Then use the loan amount, monthly rate, and number of monthly payments in the EMI formula.
- Enter the loan amount.
- Convert the annual interest rate into a monthly rate.
- Convert the monthly percentage rate into a decimal.
- Enter the total number of monthly payments.
- Apply the EMI formula.
- Use the result as the estimated monthly payment.
How to calculate EMI with an example
Suppose you borrow ₹5,00,000 at an annual interest rate of 8.5% for 60 months. The monthly rate is about 0.7083%. Using the EMI formula, the estimated monthly payment is about ₹10,258.27.
The actual repayment amount can vary depending on the loan terms, fees, and how the lender calculates interest.
FAQ
How is EMI calculated?
EMI is calculated using the loan amount, monthly interest rate, and number of monthly payments. The standard EMI formula combines all three values.
What is the formula for EMI?
The standard formula is EMI = P × r × (1 + r)n ÷ ((1 + r)n − 1), where P is the principal, r is the monthly interest rate as a decimal, and n is the number of payments.
Can I calculate EMI manually?
Yes. Convert the annual interest rate into a monthly decimal rate, enter the loan amount and number of monthly payments, and apply the standard EMI formula.
How do I calculate EMI manually?
First divide the annual interest rate by 12 to get the monthly rate. Convert that rate to a decimal, then use the loan amount, monthly rate and number of payments in the EMI formula.
Can I calculate EMI with an example?
Yes. For example, a ₹5,00,000 loan at 8.5% annual interest for 60 months gives an estimated EMI of about ₹10,258.27.
Can EMI change?
Yes. A change in the interest rate, loan amount, or tenure can change the EMI.
This guide is for general information. Calculator results are estimates based on the values you enter.